A comparison of the funding models of Monero, Dash & Zcash

A comparison of the funding models of Monero, Dash & Zcash

Crypto currencies are usually open source. For a truly decentralized currency on the Internet, it is necessary to build trust. Bitcoin demonstrated this with an open source code, which means that anyone with an Internet connection can view and evaluate the computer code. So you don’t have to trust a middleman, but can convince yourself of the processes in the technology.

However, open nature also brings with it a difficulty, namely the monetization of further development. How can a developer spend his mind and energy on something that is directly accessible to everyone and can be copied, and earn money with it?

There are different answers to this question. In her own study, Nadja Eghbal addresses this issue and compared the financing models of Dash, Monero and Zcash. She compared the projects in points 1) application process, 2) financing source, 3) decision process and 4) accountability.

The three different Bitcoin news

In Dash, the approximately 4,800 master nodes determine how ten percent of the Mining Reward is allocated to proposals: Bitcoin News Trader Review 2018 » Full Scam Check Submitting proposals costs 5 dash. The rest of the budget “burns” the Bitcoin news and thus lowers the inflation rate.

At Monero, all proposals are created and funded by the community. It is a donation model similar to the Kickstarter platform.

For Zcash, the Zcash Foundation Board issues a part of the so-called Founder Rewards for Proposals. A committee of five to six hand-picked people decides on the proposals and monthly detailed reports on the progress have to be submitted.

Analysis of the Bitcoin formula

In the application process, all three Bitcoin formula projects have similarities in that there is a preliminary stage to a proposal that separates the chaff from the serious wheat. Onlinebetrug comes to the conclusion that the Dash and Zcash proposals in particular are well documented. She also concludes that the Dash and Zcash teams are better known and more often funded. The team behind an idea seems as important to her as the idea itself.

The projects differ fundamentally when it comes to financing. Monero does not have a fixed budget and is financed by donations from the community, Dash has a fixed budget that is set out in the protocol itself, and Zcash receives the budget from the Zcash Foundation. Eghbal considers that the fixed budget at Dash could possibly lead to suboptimal ideas finding funding, simply because the money is available. With Monero, on the other hand, the community only invests in ideas it finds valuable. However, the crowdfunding mechanism also makes planning for the future difficult. Although Zcash has a fixed budget, this is distributed by a centralized foundation.

In the decision-making process, Eghbal Dash catches the eye because the master nodes use a fixed stake in Dash and thus have an economic interest in the success of the crypto currency. Nevertheless, it could happen that master nodes conspire and deliberately favour or disadvantage certain projects. With Zcash, on the other hand, the decision-making committee is hand-picked and based on human judgement of character. At Monero, she criticizes the overly open decision-making process, which can quickly turn into a “popularity contest”. Eghbal concludes that all decision-making processes have their weaknesses and that there may not be a perfect solution.

In project accountability, Eghbal Dash Watch highlights Dash Watch as a good example of clear success stories. At Zcash, she praised the frequent and detailed reports the Foundation demands. Monero seems to be a laggard, as accountability is least demanded here.

Analysis of past funding
Eghbal largely excluded Zcash from this analysis as the funding process is still relatively new and not yet sufficiently representative.

The Monero Core team’s funding proposals accounted for ten percent of the proposals, but received a third of the budget. At Dash, the core team’s work accounted for one-fifth of the proposals and was always funded. In contrast, only 80 percent of non-core proposals were able to achieve their funding.
While Monero mainly financed research, core work and conference trips, Dash spends about half of its budget on marketing.

In both Monero and Dash, there were some familiar faces whose proposals were mostly financed. Eghbal sees her presumption of a reputation effect confirmed. The median of the proposals at Mo